02 December 2006

Social Inventions and Progress

It is time that we gave more praise to entrepreneurs. Not just those that create businesses and the resultant jobs and products but those that invent a variety of social institutions - from Martin Luther's protestant churches to Jefferson's form of democracy and the Rothchilds international bank and bond market.

One way to overcome a limit is through invention. If you want to overcome the limit of gravity, you invent an airplane. If you want to overcome the limit of capital, you invent stock markets, central banks, and fiat money.

Progress occurs when communities break through limits. They typically do this through new social inventions.

So what limits progress today in the G-7 countries? I'd argue that we're no longer limited by capital. Trillions of dollars of capital is sloshing around the world in search of higher returns - alternately driving up prices of stocks, real estate, art, bonds, and other investments. We're not limited by knowledge workers - especially as the confluence of new graduates from China and India and global technology are making it possible to assign tasks to low-costs mechanical engineers, x-ray technicians, and software programmers.

I would argue that the limit to progress is no longer land, capital, or knowledge work (labor). It is, instead, entrepreneurship.

The central question, it seems to me, is how we trigger a series of social inventions that address modern problems. How do we popularize entrepreneurship, devolving power from corporate elites to the common employee, encouraging more applied creativity? How do we create credible institutions that are able to address the problems that defy today’s institutions – problems like global warming, immigration, and intellectual property? How do we get more people thinking like entrepreneurs, questioning how we create relevant institutions instead of questioning how to succeed within them?

The big problems won’t be solved, nor possibilities exploited, by people focused on succeeding within the current social institutions. Rather, as they have been at every major inflection point in history, they will be solved by people who create new social institutions – social entrepreneurs. Progress in the West has not followed from the best efforts of those who struggled to rise up through the Catholic Church or gain the favor of monarch. Rather, it followed from people who struggled to create new ways of worship and new forms of government – dispersing the power once held by elites.

Ouch! There you go making sense again. It does seem as though we lurch from crisis to crisis as a catalyst for policy change. One more reason to opt for intrinsic rather than extrinsic motivation, I guess, but meanwhile it doesn't bode particularly well for us, does it?